Law to ban cash for purchases of $10,000 or more abandoned, but don’t be surprised if it’s revived
A controversial law that would have banned cash payments over $10,000 and imposed two-year jail sentences on people evading the ban has been killed in the Senate.
But don’t be surprised if the move to limit your legal use of cash is revived at some stage.
The now-defunct law could return in some other iteration once the COVID-19 pandemic has passed.
On Thursday, following a motion moved by One Nation, the Senate officially dumped debate on the legislation, which has unofficially become known as the “cash ban” law.
Officially it’s called the Currency (Restrictions on the Use of Cash) Bill 2019 and it was supposed to take hold in January.
The Government had said the delay in bringing it forward was due to them prioritising the emergency economic response to the COVID-19 pandemic.
But it’s also likely the law’s demise had something to do with the fury that swept across the Liberal party’s core membership base — and among a number of federal MPs, who described it as “antithetical” to the party’s values.
Despite a series of amendments, the Federal Government faced the prospect of Liberal senators rejecting the proposed law in the Senate.
The cash ban bill is, for now, dead.
Regulators want to see a cashless world
But how long before we see a bill like this return?
We are living in a world where cash is fading in use as a means of payment, and regulators, including the International Monetary Fund (IMF), have made no secret of their desire to be rid of it.
The COVID-19 pandemic has only accelerated the trend away from cash towards digital transactions.
Restaurants and retailers have been encouraging their customers to use electronic payments to slow the spread of coronavirus through physical contact.
There’s no evidence that transmission of the virus via banknotes is any greater than transmission via other frequently touched objects, such as credit card terminals or PIN pads (since all would have to be properly disinfected to prevent the virus spreading).
But some retailers have refused to accept cash during the crisis.
Others have been testing whether there’s consumer appetite for cash-free stores.
Major retailer Woolworths was trialling cashless supermarkets in a few of their metro stores where cash payments were already in decline.
And governments around the world are moving to a cashless society.
A number of countries have already banned the use of cash for transactions over a certain level, and central banks around the world, including the Reserve Bank of Australia, are researching a move to central bank digital currencies (CBDCs).
It’s worth noting that while cash withdrawals are not as high as they were before the pandemic, cash still is being withdrawn by millions of Australians, even while many of us were under lockdown.
Reserve Bank of Australia payments data shows there were more than 44 million cash withdrawals worth $10.4 billion in December 2019.
The latest available figures, for September 2020, shows this was down to almost 33 million cash withdrawals worth about $9 billion.
Also at the onset of the pandemic lockdown in March, as many of us stockpiled toilet paper and baked beans, wealthier Australians withdrew thousands to millions of dollars in cash.
The RBA had reported that cash hoarding has since “abated”.
Will concerns about Orwellian motives fade as time passes?
As more people move to digital forms of payment, it’s possible that some people’s fears about a move to a cashless society also fade.
During the cash ban bill debate, several federal MPs and stakeholders raised concerns that the law would create an Orwellian state and push people into “the clutches of the banks”.
There was also much stakeholder concern, including from groups like the Law Council of Australia, about the hefty penalties attached to the now-defunct law.
It would have seen Australians land in jail or face fines of up to $25,200 if they used cash for purchases of more than $10,000.
One Nation senator Malcolm Roberts, who put forward the motion to abandon the cash ban bill on Thursday, said: “This is a fantastic win for all Australians, particularly rural and elderly Australians where the use of cash is still prevalent.
“This bill was never about tackling crime or money laundering, and instead criminalised the use of legal tender, cash, for everyday Australians.”
On the other side of the political spectrum, the Greens are also celebrating the defeat of the cash ban.
While a Senate inquiry had given the proposed legislation the thumbs up, the Greens had put forward a dissenting report raising concerns the law would restrict people’s civil liberties.
“It was trying to crack a walnut with a sledgehammer and was naively utopic about a world without cash,” Green’s economic justice spokesperson Nick McKim told ABC News after the defeat of the bill.
“If this Government is serious about money laundering, then it should go after the big players and bring forward legislation to make lawyers, accountants and real estate agents report to AUSTRAC, which was first promised in 2006.
“Australia is now one of only six countries in the world not to have done this.”
When the COVID-19 crisis passes, there may be another attempt to ban cash
Cash transactions over $10,000 are already reported to AUSTRAC, and still will be.
Despite that, the Government had been adamant that the cash ban law was the best way to fight the black economy.
It repeatedly argued that the Black Economy Taskforce found criminal gangs were using large cash purchases of cars, houses and jewellery to launder their gains from illegal activities.
“As cash is largely untraceable, this makes it difficult for law enforcement agencies to trace these activities,” Assistant Treasurer Michael Sukkar said at the time the bill was first proposed.
It was later revealed by a Treasury official during the Senate inquiry into the bill that the task force had made a qualitative estimate — based on a wide definition of what activities make up the black economy — that about $50 billion was lost to the black economy annually.
Mr Sukkar has not given any indication whether the cash ban law will be revived at some point.
When asked by ABC News whether it will be, he responded that the Government had recognised the impact of COVID-19 on small businesses and the broader economy.
“As we progress through to the recovery stage, we recognise now is not the time to impose an additional burden on small business,” Mr Sukkar said.
He added that the Government was still implementing a number of measures to “tackle serious organised crime”.
If the Government does choose to revive its cash ban law in future, it will no doubt face another tough fight within its own ranks and outside it.
But don’t be surprised if it decides to take on the battle again, hoping for a less-hostile reception once Australia recovers from the COVID-led recession, and perhaps after a federal election.